Description

Distinguish between the terms given below, using appropriate diagrams.

In answering this part of the question, it is recommended at least two diagrams for parts (i) and (ii) should be used. Students are also recommended to give text outlining the reasons why they might be different

(i) A change in quantity demanded and a change in demand and,

(ii) A change in quantity supplied and a change in supply.

Preview

Understanding the laws of supply and demand is central to understanding how the capitalist economy operates. Since we rely on market forces instead of government forces to distribute goods and services there must be some method for determining who gets the products that are produced. This is where supply and demand comes in. By themselves the laws of supply and demand give us basic information, but when combined together they are the key to distribution in the market economy price. In economy, concepts are very important therefore there is a distinction between a change in quantity demanded and a change in demand as well as a change in quantity supplied and a change in supply.
In the first part we shall see the difference between is a change in quantity demanded and a change in demand. In the second part we shall define what a change in demand supplied is and a change in supply and in the last part we shall see why this difference is important.

I. A Change in Quantity Demanded and a Change in Demand

A. A Change in Quantity Demanded

A change in quantity demanded is a change in the specific quantity of a good that buyers are willing and able to buy. This change in quantity demanded is caused by a change in the demand price. It is illustrated by a movement along a given demand curve. The only factor that can cause a change in quantity demanded is price.